The commitment to combat illicit financial flows has become a global commitment mandated in the Sustainable Development Goals (SDGs) targets. Illicit financial practices occur in various modes such as money laundering, transnational bribery, or tax avoidance and evasion.
This report presents an analysis of illicit financial flows in two primary natural resource export commodities in Indonesia, namely fisheries and coal. The analysis focuses on estimating the magnitude of illicit financial flows and the potential loss of state revenue due to illicit financial flow practices. In these two commodities, PRAKARSA analyzed the sub-sectors as a whole including highlighting the potential loss of state revenue from tax and royalty revenues.
From the results of this study, the state experienced a 10-year revenue loss of 5.58 billion US dollars or 74 trillion rupiah, equivalent to 3.7 percent of state revenue in 2021.
The results of this study are expected to contribute and be useful in designing strategies to tackle tax avoidance and tax leakage practices in Indonesia, especially in the fisheries and coal mining sectors.
Check out the full report here, happy reading!